The Simple Leader: Discovering Lean

Ten years after graduating from college with a chemical engineering degree, I was doing pretty well. I had progressed up through the engineering ranks at a Fortune 50 medical device company, moved into operations, and was running a business unit responsible for a high-profile drug infusion pump product. Although work consumed much of my life in Silicon Valley, I was able to balance it with friends and recreation. Then I got a call from corporate headquarters asking me if I would like to run a large factory in Salt Lake City. To a young career-oriented guy, it sounded like a great opportunity. I would have my own operation, live in a new city, and take a big step up in the company. Without asking a single question, I said yes. (Soon thereafter, I learned an important lesson about why you ask questions when offered new opportunities. Questions can be good things, and the more you ask before getting yourself into an unknown situation, the better.)

In Salt Lake City, I had to oversee a molding operation with sixty heavy presses running at full tilt, twenty-four hours a day, seven days a week, every day of the year. The plant was already three months behind schedule when I got there, and it was falling further and further behind every day. Additionally, the operation came with some unique extracurricular challenges. It supplied components to some critical downstream plants, which made it very visible in the eyes of executives, who closely monitored our output and put a lot of pressure on us to improve results. If that weren’t enough, there were also some questionable “activities” occurring during the night shifts. Soon after arriving, I realized that sleep would be a scarce luxury for a while.

Luckily, I had one huge asset in my favor: a bunch of talented folks equally frustrated with the situation and eager to find solutions. Looking for new ideas, I poked around on the internet and discovered something called “Lean manufacturing,” also known as the “Toyota Production System,” as well as an organization called the Association for Manufacturing Excellence (AME). AME put me in contact with two of their board members, David Hogg and Dan McDonnell, who helped me analyze the situation and what Lean concepts could be applied. Shortly thereafter, I began collecting and sharing Lean concepts with my staff. (As I studied Lean, I collected many resources that would later turn into a side endeavor called Superfactory.)

As a team, we learned how to describe value from the perspective of the customer and how to focus on flow, reduce inventory, and streamline processes. We experimented and failed often, but our efforts soon led to success. We discovered the concept of the “quick changeover,” a method that reduces down- time when preparing the machines to manufacture different parts. This allowed our operators to be much more productive, and after a year, we had caught up and were even finding ways to get rid of antiquated equipment while increasing production. When the new presses that headquarters had purchased to add capacity (spending millions of dollars in the process) finally arrived, we did not even need them. Lean really worked, and in the real world no less.

Seeing our results, my passion for Lean grew rapidly, but the company wasn’t at a point in its evolution to fully embrace it. In hindsight, this was a lesson on the importance of executive commitment to the Lean transformation process—great improvements can be made at lower levels, but a true organizational transformation requires a cultural change driven from the top. After a frustrating couple of additional years, I decided to leave this company. (Interestingly, the company is now known for its Lean prowess—perhaps the early efforts by our team did have some residual impact after all.)

In 2000, I moved back to California to run a facility recently purchased by a large telecom equipment manufacturer. When I came on board, the operation had an order backlog of nearly a year, and the long lead times were costing the company significant business. Once again, the pressure was on to improve operations. By implementing Lean methods, our team increased output from
$500,000 to $5,000,000 a month in less than six months, using the same floor space, equipment, and people as before. Once again, our Lean transformation efforts were doing great things for the company.

Unfortunately, around the middle of 2001, we began to experience a few order cancellations. Little did we know that this was the edge of the cliff that many technology companies went over later that year. The drop off came so fast that we were still hiring when we began planning our first layoff. On September
10th, I laid off the entire operations group, including myself (a painful experience, although the events of the next day would put that pain into a different perspective). The remaining operations were consolidated into the corporate facility several hundred miles away (a decidedly non Lean operation) and our product line was soon shut down, demonstrating that without executive leadership support, Lean transformations are very fragile.

Although the companies I worked for did not believe in Lean, my own confidence with it had grown to the point that instead of looking for a new job, I got together with a couple friends and started a contract manufacturing company. We thought we could leverage the power of Lean to tackle the difficult jobs that no one else wanted. We also thought that since we had such a compelling business model we would have no problem finding business. On the first point, we were correct, but on the second one, not so much. Before having to find customers for myself, I was always somewhat envious of the jet-setting lifestyle of my friends in sales and marketing, never understanding why they were paid so well. My two business partners and I, all operations grunts, learned what selling is all about—the hard way. After three years of basically paying our employees but never ourselves, we decided to admit we had learned our lesson. We shut the company down and went our separate ways.

Even though our contract manufacturing operation did not prosper, my knowledge of Lean continued to pay great dividends. Over the years, the list of Lean resources I had been collecting morphed into one of the largest and most comprehensive websites on Lean (Superfactory.com), bringing me into contact with Lean specialists from around the world. I also joined the AME board of directors. After shuttering our company, I leveraged the wealth
of contacts from those activities to join the consulting world. One of the contacts helped me find some contract work at a medical device company a short drive from my home on California’s Central Coast. One thing led to another, and I soon found myself as the president of the company, overseeing plants in California and Michigan.

In contrast to my earlier experiences, the long-term vision, commitment, and patience of the owners of my new company provided me the opportunity to try some radical Lean experiments over the eight years I was there. We reorganized the company into value streams, developed incredible teams, and even eliminated budgets. Thanks in large part to Lean improvements, we were successful enough to build a large new facility (in expensive California, no less) during the middle of a recession. We also turned traditional outsourcing thinking on its head by shipping products from California to China and India.

Along the way, I learned many valuable lessons, including how to use many of the same Lean concepts to become personally more productive. Later in this book, I’ll be sharing these lessons, from both personal and professional perspectives.